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The market is whipsawing these days. It is not often in any typical day that we see the Dow to reverse by 200 points. Guess what? We had three such days in a row, which was unprecedented going back to at least 25 years. Simply put, the market has no trend. Eventually the market will choose a direction, either up or down, but we are not there yet.
We got more economic news this morning. Unfortunately, most were again tilting to the negative side. Start with the weekly jobless claims. It came at 349K, more or less in line with expectation. However, the previous week’s number was revised up by 10K, causing the 4-week average number to move above 360K, the highest in more than 2 years. In addition, the existing claims were also revised up by almost 50K to 2.78 million. Although the weekly claim number is not in recession level yet, the trend is clearly not promising. Separately, the Leading Indicator dropped 0.1% in January, the fourth consecutive decline. Then at 10am, we got the Philadelphia Fed manufacturing survey, which came much worse than expected at -24.0 while economists forecasted for -10.0. It is the lowest reading in that region in more than 7 years. So far in February, we got two rather weak regional manufacturing reports and this doesn’t bode well for the national manufacturing report which is scheduled to be released on Mar 3rd.
Interestingly, the slow growth perspective didn’t deter speculators from pushing commodity prices even higher. Although oil price was retreating a little bit following a bigger-than-expected build up in weekly inventory, several precious metals including gold and platinum hit new historical highs, so did some agriculture products. The CRB commodity index closed at another historical high. The US dollar got weakened against major currencies while treasuries rallied sharply following today’s weak economic reports. Similar to the Fed’s forecast yesterday, the European Commission today also cut its forecast for that region’s economic growth and hiked its inflation expectation. It seems the world is indeed more closely connected.
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